Human Life Value Calculator

What is HLV (Human Life Value)?

Human life value, or HLV or ideal life cover is a number that indicates the present value of future income, expenses, liabilities, and investments. This number is generally used to determine the amount of money needed to secure your dependents’ lives with term insurance if you are no longer there to provide for them. Based on your HLV, you can assess the finances your dependents will need to fund their expenses in your absence or unfortunate demise. Basically, you should purchase term insurance with a cover equivalent to your HLV for the people who depend on you to sustain their lifestyle.

In addition to this, HLV considers the rate of inflation to ensure that the estimated life insurance cover maintains its value over time.

What is the Human Life Value (HLV) Calculator?

The human life value calculator, or the HLV calculator, helps you estimate the current worth of your future income. The tool can help you tackle the financial stress your family might face during your unfortunate absence. This Human Life Value (HLV) Calculator further helps you determine the estimated life cover you need to secure loved ones. Simply put, this Human Life Value guides you towards identifying the death benefit amount your dependents will be entitled to out of your term insurance policy.

For example, if Anjali is a 35-year-old earning ₹10 lakhs annually, with a plan to cover until 60, the HLV calculator might suggest she needs ₹2.5 crore in life insurance coverage to ensure her family can maintain their current lifestyle and cover future expenses if she were no longer around to provide financially.

How Does the Human Life Value Calculator Work?

Let’s understand human life value calculation with the help of this example:

Aakash is currently 37 years old and earning 15 Lakhs per month. He already had active life insurance of 10 Lakhs and wanted to check his eligibility for another life insurance. He enters his age, annual income, and the existing life insurance’s cover amount into the HLV calculator. The human life value calculator displayed his total eligibility for a 3 Crore life insurance. However, since he already had a 10 Lakh cover, he is eligible to purchase a new plan of cover of up to 2.8 Crores.

How To Calculate Human Life Value Online?

Understand how to calculate human life value online and use the calculator to know the results in seconds. Below mentioned are the steps to use the human life value calculator:

Step 1: Enter your age.

Step 2: Enter your annual income.

Step 3: Mention if you have existing life insurance coverage and an existing life insurance cover.

Step 4: Click on “Calculate Now”.

What is the Formula to Calculate Human Life Value?

The human life value can be calculated using the following formula:

Retirement age - current age x annual salary

With this online HLV calculator, you can get accurate and quick results. However, your Human life value at 25 will be different from what you shall need at the age of 35. Therefore, use the HLV calculator featured on our website regularly to keep updated about your insurance needs.

Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying the plan.

What are the Benefits of Using the HLV Calculator?

Here are the important benefits of using a HLV Calculator:

• Customized insurance coverage: This calculator suggests an ideal life cover on the basis of your income, financial responsibilities, and lifestyle.

• Check future needs: It considers the long term needs of your family, including debt repayment, education, future goals, and daily expenses.

• No difficult maths: You do not need to learn the formula of human life value, the calculator does it all for you.

• Easy and quick: It takes just a few minutes to enter details and get a right estimate.

• Good financial planning: It helps you understand how much life insurance coverage is needed to protect your family’s long-term financial stability.

Why is HLV or Human Life Value Calculation Important?

HLV is an important metric to determine insurance needs if you have family members depending on you for finances. When choosing an insurance cover, you should ensure that it is as comprehensive as possible to enable a smooth transition for your family after your death. Having an idea of the financial obligations and ensuring that your dependents don’t have to struggle to keep up with those is why calculating your HLV is important.

Briefly, calculating your HLV will help you address the following uncertainties:

• It Helps Estimate the Right Coverage Amount
  The human life value calculator uses details such as your age, income, and financial responsibilities to estimate the amount of life cover your family will need. This helps you arrive at a more accurate coverage amount instead of selecting an amount randomly.

• It Considers Your Future Earning Potential
  Your current income is only one aspect of your family’s financial needs. The HLV calculator also considers how many working years you may still have ahead. This helps estimate the financial contribution your family could lose if you are not around.

• It Helps Avoid Being Underinsured
  Many people choose a small coverage amount simply to keep premiums low. The human life value calculator highlights whether the chosen sum assured may fall short of your family’s actual financial needs.

• It Prevents Paying for Unnecessary Coverage
  At the same time, the human life calculator helps make sure you do not buy more coverage than necessary. This can help you keep your premiums affordable while still maintaining large and meaningful protection.

• It Supports Better Financial Planning
  The HLV calculator also factors in liabilities and future expenses such as loans, children’s education, or household costs. This gives you a clearer view of the financial protection your family may need to maintain their lifestyle in your absence.

What are the Types of HLV Calculations?

The important ways to calculate HLV are discussed below:

• Income Replacement:
  The method estimates the regular income that your family will need from the insurance payout to support themselves.

• Need-based:
  This considers the specific needs the insurance cover is expected to cover, such as debts/loans, mortgages, etc. Need-based calculation can also be used to finance goals such as child education, marriage, etc.

• Combination Method:

The Combination Method is a mix of the two. It starts by using the Income Replacement Method to figure out a starting amount. Then, it checks that amount against the financial goals set in the Need-Based analysis to make sure it is correct. The two checks will make sure that the final HLV is not just a theoretical replacement for the income, but also something that is practically enough to meet all of the family's future financial needs. This will make the life insurance recommendation very accurate and tailored to the family.

FAQs